By Neil Ashdown, Global Insights.
5 January, 2010.
Acting Prime Minister Sam Abal has today ordered an investigation into the payment of grants related to the country's flagship liquefied natural gas (LNG) project. Abal stated that the investigation was only being launched "because there are allegations and innuendos in the media that payments have been made to a few groups who are well outside the ... areas [covered by the scheme]".
The local Post-Courier newspaper today ran a report stating that payments had been made to companies outside the area. The business development grants (BDG), worth US$25.8 million in total, were paid out to over 50 landowner companies at the end of last year. Landowner companies are companies set up by local customary landowners and represent one of the government's primary vehicles for ensuring that Papua New Guineans feel the benefits of the massive LNG project.
This is important because disgruntled landowners have protested and on some occasions attacked development work related to the project. In November last year protesting landowners forced the closure of a key airport. Today Minister of Internal Security Mark Maipakai called on disgruntled landowners not to take the law into their own hands. He said that "threatening the government and the developers is not the way forward".
Significance: The investigation is intended first and foremost to answer concerns on the parts of aggrieved Papua New Guineans. Corruption is a major problem in Papua New Guinea (PNG) and one that damages the perception of the country in the eyes of its own citizens and foreign investors. The issue of payments related to development on land related to the LNG project is particularly sensitive. While it is unlikely that the investigation will lead to any significant developments, the fact that it is taking place at all represents an increasing awareness on the part of Papua New Guinea's leaders that they need to be seen to take a strong stance on the issue.